You've seen those commercials in which an airline pilot, or surgeon, or nuclear engineer is giving expert advice only to acknowledge eventually to his nonplussed listeners that while he is not actually a fill-in-the-blank, he did stay at a Holiday Inn Express last night. Do you ever get the feeling that we are getting Holiday Inn Express government?
Does anything they say make basic economic sense? President Obama and the Democratic Party propose to save money (or what they call "bend the cost curve") on health care spending. They will spend less, they say, but also cover more people -- the 47 million or 30 million uninsured (Obama has used both numbers). This will be accomplished without reducing care for anyone and without raising taxes on anyone except the rich. In fact, care will be improved.
Sounds great. But do these people know what they're doing? They mouth the words "choice" and "competition" but only, ironically, in praise of a "public option." The concept of encouraging choice and competition in the health insurance market -- say by permitting interstate sales -- is off the table.
The Wall Street Journal provided a handy chart of "Uncle Sam's Cost Overruns." In 1965, when Medicaid was enacted, the House Ways and Means Committee estimated that first year costs would amount to about $238 million. The actual price was $1 billion. The program now costs $251 billion annually and is climbing fast. The record is similar for Medicare. In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost -- $90 billion. As Peter Orszag, director of the Office of Management and Budget has admitted, "If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5 percent of GDP today to 20 percent by 2050."
So the same people who brought you cost spirals in Medicare and Medicaid now propose to introduce another government health program. Don't worry, they assure us, we know how to provide efficiencies. It's not necessary to dwell on the risible claim that they will cut half a trillion in waste from the Medicare budget. If they know where that waste is, why aren't they cutting it now? Where, on the books, are the federal waste-cutting initiatives?
The administration has also highlighted two other ideas that will supposedly provide tremendous cost savings. Both have been in the news lately.
Starting during the campaign, President Obama touted digital medical records to reduce errors, improve care, and cut costs. More than $19 billion of stimulus funds were earmarked for it. But when the Washington Post examined the matter, they discovered that digital records not only fail to produce the promised benefits, they actually reduce efficiency and cause errors. The digital systems currently available give physicians too much information. Pages upon pages of digital information document every conceivable ailment a patient might have. Doctors have difficulty wading through all of the unnecessary data to reach the critical information. One emergency room physician at a hospital that had adopted a digital system complained, "It's been a complete nightmare. I can't see my patients because I'm at a screen entering data . ... Physician productivity and satisfaction have fallen off a cliff." Some hospitals have adopted digital systems only to abandon them.
Another silver bullet the administration has peddled is preventive care. Everyone knows that a timely PSA test will detect prostate cancer at an early and treatable phase thus saving the patient's life and saving money, right? Not exactly. The test is obviously worthwhile for that individual. But testing all men for prostate cancer -- an overwhelming majority of whom will never get the disease -- is expensive. If more and more of us are tested for more and more diseases -- even accounting for some illnesses found early -- health spending will rise, not fall. Further complicating the picture, the National Cancer Society has announced that the benefits of cancer screenings, particularly for breast and prostate cancers, have been oversold. They aren't saving very many lives, but they are causing needless tests and surgeries.
The Baucus bill -- even before being melded with House versions -- weighed in at 1,502 pages of new taxes, fees, and mandates. Every single page proclaims something that is dubious -- that the Democrats know what they are doing.
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